Company is considering the acquisition of company

Assignment Help Financial Management
Reference no: EM131842667

Company A is considering the acquisition of Company B. B currently derives its sales from the US. A expects to create value by expanding B’s sales to Asia and expects the following improvements: Asian segment will create revenue of $400 one year after the acquisition, and is expected to increase at an annual rate of 4% in perpetuity. The pre - tax operating margin on the increased revenue will be 30%. Pre - tax operating margin = (Revenue-Cash costs/Revenue). It is anticipated that annual cash costs will be reduced by $600, starting one year after the acquisition, and the decrease will be perpetual. There will be no changes in capital expenditure or working capital . The tax rate is 25%, WACC is 9%. B’s pre-acquisition stock price (before any news of acquisition became public) is $75 and it has 200 shares outstanding. What is A’s breakeven price per share for B?

Reference no: EM131842667

Questions Cloud

What each of the barriers are and how we might overcome them : Explain what each of the barriers are and how we might overcome them. Describe an example from one of the module videos.
Would socrates have mistreated athens : 1. Is it always morally wrong to mistreat others, even if they have mistreated us? 2. Would Socrates have mistreated Athens by escaping from prison?
Pre-socratic philosophers : What are the methods underlying the various claims about reality made by the pre-Socratic philosophers?
Act of curiosity that is unforgettable : What is one lesson from the act of curiosity that is unforgettable.
Company is considering the acquisition of company : Company A is considering the acquisition of Company B. What is A’s breakeven price per share for B?
Important rules of lexical definitions : What do you think are the most important rules of lexical definitions?
Mike is two year-old who attends daycare : Kevin is seven years old who is in the first grade and mike is two year-old who attends daycare The will be attending school later in the future.
Dialog between two characters : Plato's Republic, found on pages 58-59. (Since this reading is presented as a dialog between two characters, treat the argument it makes as a dialectical
Disobey the law of the land : Is it ever morally permissible to disobey the law of the land (say, the USA)?Why or why not? And if it is sometimes permissible, when is it permitted, or under

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd